N.J. utilities official declares battle over energy policy

AMY NEWMAN/NE News ConsortiumLee Solomon, president of the New Jersey Board of Public Utilities

The state moved ahead last week with plans to subsidize new natural gas power plants despite an unfavorable federal ruling, and Board of Public Utilities President Lee Solomon announced plans for more projects, describing the energy policy disagreement as a battle between the Christie administration and the federal government.

"By moving forward (with the projects), it’s pretty clear that this board and this state intend to build new generation," Solomon said in a public meeting Wednesday. "This is the classic states’ rights versus federal authority issue."

The subsidies were created by a state law signed in January with the goal of replacing older power plants and creating jobs. Proponents said the move would save utility ratepayers billions.

But suppliers left out of the subsidies complained to federal regulators that the state sweetener would undercut normal prices in an interstate power auction. They pushed for rules to limit the new plants’ bids, and PJM Interconnection, the regional organization that supervises the auction, agreed with the complaint.

That led the Federal Energy Regulatory Commission, or FERC, to tighten rules for how low the projects could bid at auction, restricting the finances for the new plants.

State officials weren’t pleased, and Solomon said last month the decision put the subsidized projects "at a serious disadvantage" at auction.

Competitive Power Ventures, a Maryland-based developer of energy projects, agrees. The company plans to build Woodbridge Energy Center, a 663-megawatt plant, on the site of a former chemical plant, but said the rules put forward by FERC could stop that from happening.

Braith Kelly, a senior vice president of external affairs for CPV, said he believes the project will still be built in a timely fashion.

"I equally believe it will require some change at FERC for us to build on the current contract," Kelly said.

The state still has the right to appeal the decision before FERC, and could go to court if that effort fails.

At the board’s meeting last week, Solomon and other commissioners railed against FERC and PJM Interconnection.

PJM was formerly named the Pennsylvania, New Jersey, Maryland Power Pool, but now is in charge of power transmission for more than a dozen states including Delaware, Illinois, Ohio and Pennsylvania.

Solomon said in an interview last week that beyond the nearly 2,000 megawatts of new power the state has already awarded subsidies to, the board would like to add another 1,000 megawatts.

Every 1,000 megawatts of power capacity powers about 400,000 households. The state has a total of about 20,000 megawatts of power capacity, more than half of which is natural gas plants.

But Solomon and other members have said they want cleaner new power plants to supply the state, and complained that PJM and FERC are interfering with efforts to make that happen.

"While we are part of PJM, it appears that we could benefit from 3,000 megawatts of new generation," Solomon said. "The only timeframe I have is the sooner the better."

The board president repeatedly inveighed against federal regulators when discussing the topic.

"There are gross disparities between the rates being paid for capacity in New Jersey and other areas in PJM," Solomon said. "That puts us at a competitive disadvantage. It’s not good enough for us to say, ‘Last person out of New Jersey, turn off the lights.’"